National Oilwell Varco 2002 Annual Report Download - page 43

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The following summarizes information about stock options outstanding as of December 31, 2002:
Weighted-Avg.
Range of Remaining Weighted-Avg. Weighted-Avg.
Exercise Price Contractual Life Shares Exercise Price Shares Exercise Price
$ 5.62 to $10.52 2.98 1,131,451 10.21$ 1,131,451 10.21$
$11.45 to $21.70 8.57 1,049,425 18.21 111,925 15.56
$22.56 to $40.50 6.55 1,609,620 32.73 876,316 30.10
Totals 6.04 3,790,496 21.99$ 2,119,692 18.71$
Options Outstanding Options Exercisable
The weighted average fair value of options granted during 2002, 2001 and 2000 was
approximately $8.95, $22.04, and $15.70 per share, respectively, as determined using the Black-
Scholes option-pricing model. Assuming that we had accounted for our stock-based
compensation using the alternative fair value method of accounting under FAS No. 123 and
amortized the fair value to expense over the option’s vesting period, our net income and net
income per share would have been (in thousands, except per share data):
2002 2001 2000
Net income:
As reported 73,069$ 104,063$ 13,136$
Pro forma 63,926$ 94,227$ 5,584$
Basic net income per share:
As reported 0.90$ 1.29$ 0.17$
Pro forma 0.79 1.17 0.07
Diluted net income per share:
As reported 0.89$ 1.27$ 0.16$
Pro forma 0.78 1.15 0.07
Year Ended December 31,
These pro forma results may not be indicative of future effects.
The assumptions used in the Black-Scholes option-pricing model were:
Assumptions 2002 2001 2000
Risk-free interest rate 2.4% 6.3% 4.7%
Expected dividend - - -
Expected option life (years) 5 5 4
Expected volatility 54% 55% 94%
The Company evaluates annually the grant of options to eligible participants and in February
2003, 977,500 options to purchase shares of common stock were granted at an exercise price of
$20.14, the fair value of the common stock at the date of grant.
41